Prices of Oil Rise Thursday as US-China Agree to Lift Tariffs

Oil prices appreciated on Thursday, recovering from losses recorded on Wednesday as China and the U.S. agreed to lift existing tariffs if a partial trade deal is reached.

Oil futures had suffered declines as a result of the trade war between both super countries and this had consistently had a toll on oil demand which then affects prices.

As at 8 p.m. (Nigerian Time) on Thursday, Brent Crude was gaining 75 Cents or 1.21 percent to trade at $61.65 per barrel, while the US West Texas Intermediate (WTI) Crude was charting higher by $1.13 equivalent to 2.01 percent to trade at $57.48 per barrel.

According to reports that brought positive news, the trade talks was seeing a green light and this provided an upbeat backdrop for crude demand at the market.

This followed disclosure by Gao Feng, a ministry spokesperson for China’s Commerce Ministry, who said both giants have agreed to the simultaneous removal of import duties recently imposed as the parties move closer to a signing a long due trade pact.

According to analysts, this news that tariffs are to be lifted under what is tagged a Phase One trade deal handed oil a boost on Thursday. This occurred despite US government data released on Wednesday which showed a continuous weekly climb in domestic crude supplies.

Business Post had reported in September that China and the United States traded tariff and counter-tariff announcements with China placing tariffs on a range of US products worth $75 billion, including crude oil, in two batches scheduled for September 1 and on December 15.

U.S. President Donald Trump had then retaliated with announcements of higher tariffs on Chinese products which escalated the dispute and sent oil prices tumbling.

Also, investors have been focused on signs of growing US oil inventories which has weighed on prices.

It was reported that the Energy Information Administration (EIA) on Wednesday disclosed that US crude supplies rose a second straight week, this time by 7.9 million barrels for the week ended November 1.

Meanwhile, Oil producers are still set to meet on December 5 – 6in Vienna, Austria to review the policy set by the Organization of the Petroleum Exporting Counties (OPEC) and allies such as Russia to limit supplies until March next year.

OPEC Secretary-General, Mohammad Barkindo said on Tuesday that he was more optimistic about the outlook for 2020 because of developments on trade disputes, hinting at the possibility of no need to cut output more deeply.

Even with Thursday’s news, Investors will be wary as to when the deal will be signed with a location not yet confirmed and with this, they will also need to look at how it could contributed to oil prices pointing south in coming weeks.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.